Ministry of Advanced Education Student Aid Fund. Annual Report for saskatchewan.ca

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1 Annual Report for saskatchewan.ca

2 Table of Contents Letters of Transmittal... 1 Introduction... 2 Program Overview... 3 Mandate Statement... 3 The Saskatchewan... 3 Student Financial Assistance Programs... 4 Summary of Awards and Benefits: Financial Overview... 8 Management s Responsibility for Financial Statements... 8 Provincial Auditor s Report... 9 Financial Statements...10 For More Information...19

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4 Letters of Transmittal His Honour, the Honourable W. Thomas Molloy, Lieutenant Governor of Saskatchewan May it Please Your Honour: The Honourable Tina Beaudry-Mellor, Minister of Advanced Education I respectfully submit the Annual Report of the Saskatchewan for the fiscal year ending March 31, The financial statements included in the report were prepared by the and audited by the Provincial Auditor of Saskatchewan. Tina Beaudry-Mellor Minister of Advanced Education The Honourable Tina Beaudry-Mellor, Minister of Advanced Education Dear Minister Beaudry-Mellor: We, the Trustees of the, have the honour of presenting the Annual Report of the Saskatchewan Student Aid Fund for the fiscal year ending March 31, During the year under review, the programs provided through the Fund contributed to a high degree of accessibility to post-secondary education and provided services to meet the needs of individuals and communities in Saskatchewan. Financial assistance provided through the Fund aligns with the strategies and key actions identified in the Plan for the to support Government s goal of sustaining growth and opportunities for Saskatchewan people. Respectfully submitted, Mark McLoughlin Trustee Rupen Pandya Trustee 1

5 Introduction The Annual Report of the Saskatchewan (the Fund) provides an overview of the Fund s organization and financial assistance provided in the form of loans, bursaries and grants. The report also includes the Fund s March 31, 2018 financial statements. Highlights Highlights of the Saskatchewan in : Saskatchewan Student Loans totaling $61,949,412 were disbursed to 15,868 full-time students; A total of 12,817 students were provided with $11,003,111 in up-front grants; A total of 8,380 students were provided $8,294,337 in debt reduction benefits; The Repayment Assistance Plan provided $1,032,349 in benefits to 4,938 students who were having difficulty repaying their loans; Saskatchewan Student Grants in excess of $63,366 were disbursed to 97 students with permanent disabilities and part-time students; Total loans receivable were $134,483,942; The Federal Student Grant for Services and Equipment for Persons with Permanent Disabilities disbursed $1,541,582 through the Fund; Saskatchewan Student Loan Forgiveness for Nurses and Nurse Practitioners provided $106,413 to 82 nurses and nurse practitioners. Alignment with Government s Direction The Ministry supports the strategic priority from the Saskatchewan Plan for Growth: improving education outcomes. Our activities in align with Government s vision and four goals: Saskatchewan s Vision to be the best place in Canada to live, to work, to start a business, to get an education, to raise a family and to build a life. Sustaining growth and opportunities for Saskatchewan people Meeting the challenges of growth Securing a better quality of life for all Saskatchewan people Delivering responsive and responsible government The Saskatchewan supports Government s goal of sustaining growth and opportunities for Saskatchewan people and the Ministry s strategy of increasing post-secondary education attainment. 2

6 Program Overview Mandate Statement The Ministry is responsible for the post-secondary education sector that supports a growing Saskatchewan and that leads to a higher quality of life. The Ministry places a high priority on meeting the needs of students by ensuring that our post-secondary sector is accessible, responsive, sustainable, accountable and provides quality education. Working with our post-secondary institutions, the Ministry is focused on providing opportunities for all students, especially First Nations and Métis people, to prepare them to live, work and learn in Saskatchewan. The Saskatchewan The Saskatchewan was created in 1949 by the Government of Saskatchewan to ensure that students would not be denied access to post-secondary education or training due to lack of financial resources. The Fund administers programs that provide repayable and non-repayable financial assistance to qualified Saskatchewan residents enrolling in approved post-secondary programs. Students who receive financial support through the are able to pay for tuition, books, accommodations and other necessities, allowing them to enrol in post-secondary studies and gain skills that will lead to improved employment and income earning opportunities. For many of these students, pursuing a post-secondary education would have been difficult or impossible without that support. Authority for administration of the Saskatchewan is provided by The Student Assistance and Act, 1985 and related regulations. This legislation calls for: Three trustees to administer the Fund; A Scholarship, Bursary and Loan Committee to make recommendations to the Minister responsible for post-secondary education; and The Ministry, over which that Minister presides, to operate the Fund. The Saskatchewan Student Loans Program has evolved over the years with the goal of continuing to improve financial accessibility for Saskatchewan students. Throughout this process, many changes have been implemented to streamline the assessment, approval and repayment of student loans. The Canada-Saskatchewan Integrated Student Loans Program is delivered jointly by the Governments of Canada and Saskatchewan. Financial assistance provided by both levels of government is aligned, where possible, to provide maximum benefit to the student. The Saskatchewan Annual Report represents only Saskatchewan loans and grants. The exception is federal programs (i.e., Federal Student Grant for Services and Equipment for Persons with Permanent Disabilities) that are issued or administered through the Fund. Borrowers are also likely to have received federal loans and grants and may have received funding from other sources as well. Annual report information on the federal portion of loans and grants can be found online at 3

7 Student Financial Assistance Programs Full-Time Student Loans Loans for full-time students are provided through the Canada-Saskatchewan Integrated Student Loans Program. All applications are assessed to determine financial need by subtracting the contributions expected from the student and the student s family from the educational and living costs allowed under the program. The maximum Saskatchewan Student Loan that can be authorized is $198 per week of study. The exception is medical students, who can be approved for a Saskatchewan Student Loan of up to $365 per week. For students starting on or before July 31, 2017, a number of benefits were available after their studies to reduce the amount that is repayable. For students enrolled in programs starting on or after August 1, 2017, a new up-front grant system replaced these benefits. There are also a number of provisions to accommodate students with permanent disabilities. Interest-Free Status The provincial government pays the interest on student loans for full-time students while they are attending a designated educational institution. Students are responsible for the interest on student loans from the first day of the first month after they cease full-time study. Students are not responsible for interest that accrues on their student loans between academic periods if the break is six months or less, and appropriate documentation is submitted. Students who are attending a designated educational institution as a full-time student, but who are not receiving financial assistance for that year or semester, may keep any federal and provincial student loans in interest-free status by submitting appropriate documentation. Grants and Debt Reduction Benefits Simplified eligibility requirements and a new grant (Saskatchewan Student Grant), that provides a maximum of $30 per week, targeted towards low-income students, were introduced at the beginning of the new loan year (August 1, 2017). As such, is a transition period that includes expenses relating to the new Saskatchewan Student Grant and grants and bursaries offered in previous years. The new progressive grants are calculated based on the number of weeks of study, the previous year s family income and family size. The grants progressively decline as annual income increases 1. For students starting on or before July 31, 2017, the following debt reduction benefits were automatically applied following the study period first against the student s Saskatchewan loan debt and then, if funds remained, against the federal loan debt. In comparison, the new grants are calculated based on the previous year s income and are determined at the start of the study period. The Saskatchewan Student Bursary provides assistance to a maximum amount of $140 per week of study to all students (except graduate students, medical students and students who are above middle-income) with loan assistance exceeding $210 per week of study. The Saskatchewan Student Grant for Students from Low-Income Families provides assistance in the amount of $58 per week of study to low-income students enrolled in one year programs and to students enrolled in graduate and post-graduate programs. 1 Eligibility thresholds for the new progressive grants are defined in the Canada-Saskatchewan Integrated Student Loan Handbook edition 4

8 The Saskatchewan Student Grant for Students from Middle-Income Families provides assistance in the amount of $23 per week of study to middle-income students enrolled in one year programs and to students enrolled in graduate and post-graduate programs. The Saskatchewan Student Grant for Low-Income Students with Dependent Children provides assistance in the amount of $47 per week of study per dependent to low-income students with dependent children between the ages of 12 and 18. Repayment of Student Loans Students with Canada-Saskatchewan Integrated Student Loans make payment arrangements with the National Student Loans Service Centre. Repayment options are available to students who are unable to meet the repayment terms of their loan agreements. Repayment terms may be revised or interest and repayment relief may be provided through debt management tools. The Saskatchewan Student Loan Forgiveness for Nurses and Nurse Practitioners program provides up to $4,000 per year in Saskatchewan Student Loan forgiveness to a maximum of $20,000 over five years to a nurse or nurse practitioner working in a Saskatchewan community of 10,000 or less. Debt Management Tools Repayable and Non-Repayable Assistance % - $21,888,872 58% - $30,029, % - $23,111,132 44% 44% - $23,449,648 45% - $25,440,101 56% - $28,963,086 56% - $29,516,658 55% - $31,267,489 47% - $27,775,061 53% - $31,917, % - $53,655, % - $19,297, Repayable Non-Repayable When a borrower is unable to meet the repayment terms, there are a variety of debt management tools available for borrowers with a Canada-Saskatchewan Integrated Student Loan. The Repayment Assistance Plan Stage 1 provides repayment deferral to eligible borrowers for a maximum of 60 months. Borrowers with incomes below minimum thresholds do not make monthly payments. Borrowers with incomes above minimum thresholds, but insufficient to cover their entire required payment, make affordable payments that are applied first to principal and then to interest. The Repayment Assistance Plan Stage 2 provides loan forgiveness to borrowers demonstrating prolonged financial hardship who have either exhausted Repayment Assistance Stage 1 benefits or who have been in repayment for 10 years. Borrowers with incomes below minimum thresholds do not make monthly payments. Borrowers with incomes above minimum thresholds but insufficient income to cover their entire required payment make affordable payments. The province will cover the balance of the required payment to ensure that the borrower s debt is completely paid by the end of 15 years from loan consolidation. The Permanent Disability Benefit is available to all borrowers regardless of when their loan was issued and whose disability prohibits employment or retraining. For borrowers with less severe disabilities where the potential for employment or retraining are impaired, an Accelerated Repayment Assistance Plan provides for loan forgiveness over a maximum 10 year period. Under the Accelerated Repayment Assistance Plan, borrowers with incomes above minimum thresholds but insufficient income to cover their entire required payment make affordable payments. 5

9 Other Saskatchewan Student Grants The Saskatchewan Student Grant for Services and Equipment for Persons with Permanent Disabilities provides a maximum of $2,000 per year to Saskatchewan students to cover exceptional education-related expenses directly related to the student s permanent disability. The Saskatchewan Student Grant for Part-Time Studies provides for direct educational costs up to a maximum of $800 per year to high need students who are enrolled in part-time studies. Federal Awards Issued or Administered through the The Canada Student Grant for Services and Equipment for Persons with Permanent Disabilities provides a maximum of $8,000 per year to students to cover exceptional education-related expenses directly related to the student s permanent disability. The grant is administered by the. Payments and tax receipts are issued through the Saskatchewan. 6

10 Summary of Awards and Benefits: Highlighted below is a summary of awards and benefits to assist students in the pursuit of post-secondary education. Full-Time Loans Summary of Awards and Benefits: Number of Students Total Amount Saskatchewan Student Loans Disbursed 15,868 $61,949,412 Debt Reduction Benefits Saskatchewan Student Bursary 6,600 $7,150,037 Saskatchewan Student Grant for Persons from Low-Income Families 938 $757,129 Saskatchewan Student Grant for Persons from Middle-Income Families 564 $178,013 Saskatchewan Student Grant for Low-Income Persons with Dependent Children 278 $209,158 Debt Management Tools Repayment Assistance Plan Stage 1 3,713 $378,273 Repayment Assistance Plan Stage $311,641 Accelerated Repayment Assistance Plan for Borrowers with a Permanent Disability 606 $342,435 Permanent Disability Benefit 7 $44,616 Saskatchewan Student Loan Forgiveness for Nurses and Nurse Practitioners 82 $106,413 Saskatchewan Student Grants Saskatchewan Student Grant 12,817 $11,003,111 Saskatchewan Student Grant for Services and Equipment for Persons with Permanent Disabilities 38 $23,910 Saskatchewan Student Grant for Part-Time Studies 59 $39,456 Federal Awards Canada Student Grant for Services and Equipment for Persons with Permanent Disabilities Data Source: Advanced Education Student Services and Program Development Records 441 $1,541,582 7

11 Financial Overview Management s Responsibility for Financial Statements The accompanying financial statements are the responsibility of the management of the. They have been prepared in accordance with Canadian public sector accounting standards, using management s best estimates and judgements where applicable. Management is responsible for the reliability and integrity of the financial statements, the notes to the financial statements, and other financial information contained in this report. Management is also responsible for maintaining a system of internal controls, policies and procedures designed to provide reasonable assurance that assets are safeguarded and that accounting systems provide timely, accurate and reliable financial information. The Trustees of the are responsible for ensuring that management fulfills its responsibilities for financial reporting, internal control and administering the Fund in accordance with The Student Assistance and Act, 1985 and related regulations. The Trustees meet with management to satisfy themselves that management s responsibilities are properly discharged and to review the financial statements. The accompanying financial statements for the year ended March 31, 2018 have been approved by the Trustees of the. The Provincial Auditor of Saskatchewan has audited the financial statements of the in accordance with Canadian generally accepted auditing standards and her report follows. Regina, Saskatchewan May 17, 2018 Scott Giroux Executive Director, Corporate Finance 8

12 Provincial Auditor s Report INDEPENDENT AUDITOR S REPORT To: The Members of the Legislative Assembly of Saskatchewan I have audited the accompanying financial statements of the Saskatchewan, which comprise the statement of financial position as at March 31, 2018, and the statements of operations and changes in net financial assets, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards for Treasury Board s approval, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the Saskatchewan as at March 31, 2018, and the results of its operations and changes in its net financial assets and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Regina, Saskatchewan May 16, 2018 Judy Ferguson, FCPA, FCA Provincial Auditor 9

13 Financial Statements Saskatchewan Statement of Financial Position As at March 31 (thousands of dollars) Financial Assets Due from General Revenue Fund (Note 6) $968 $49 Appropriation Due from General Revenue Fund 2,500 1,700 Accrued Interest Other Receivables 1,084 1,557 Student Loans Receivable (Note 4) 134, ,753 Total Financial Assets $139,055 $109,081 Liabilities and Net Financial Assets Liabilities General Revenue Fund Loan (Note 7) $135,004 $104,004 General Revenue Fund Interest Payable (Note 7) Due to Royal Bank of Canada Other Accounts Payable Total Liabilities $136,286 $105,223 Net Financial Assets $2,769 $3,858 See accompanying notes to financial statements $139,055 $109,081 10

14 Saskatchewan Statement of Operations and Changes in Net Financial Assets For the Year Ended March 31 (thousands of dollars) Revenue Budget (Note 9) Appropriation from the General Revenue Fund $26,200 $27,700 $35,000 Grant - Federal Canada Student 1,400 1,867 1,505 Interest Revenue from the General Revenue Fund (Note 6) Interest on Student Loans 2,170 2,437 1,983 Loan Discount Amortization 1,570 1,807 1,603 Recovery of Bad Debt Other Income Actual 2018 Actual 2017 $31,555 $34,458 $40,543 Expense Saskatchewan Student Grant $11,801 $11,003 $ - Saskatchewan Student Bursaries 3,991 7,150 28,600 Low-Income and Middle-Income Student Grants ,638 Student Grants for Borrowers with Dependents Age Provincial Student Grants - Other Canada Student Grants 1,400 1,542 1,410 Interest Grants to Students 3,050 3,734 1,566 Royal Bank Interest Differential Repayment Assistance Plan 2,800 3,186 1,238 Nurses Loan Forgiveness (6) Permanent Disability/Death Benefit Bad Debt 2,445 3, Interest on General Revenue Fund Loan (Note 7) 2,500 2,815 2,141 Service Provider Costs Collection Costs $29,985 $35,547 $39,665 (Decrease) Increase in Net Financial Assets for the year $1,570 $(1,089) $878 Net Financial Assets, beginning of year 3,858 3,858 2,980 Net Financial Assets, end of year $5,428 $2,769 $3,858 See accompanying notes to financial statements 11

15 Saskatchewan Statement of Cash Flows For the Year Ended March 31 (thousands of dollars) Cash Receipts provided by (used in) Operating Activities Receipts from General Revenue Fund $26,900 $34,300 Receipts from Federal Government 1,415 1,274 Receipts from Student Loan Repayments Including Interest 19,395 16,999 Receipts of Bank Interest Payment of Student Loan Disbursements (61,949) (59,693) Payments to Royal Bank (84) (127) Payments for Bursaries, Grants and Other Student Support (12,494) (1,602) Payments of Interest on General Revenue Fund Loan (2,690) (1,944) Payments of Service Provider and Collection Costs (626) (405) Total Operating $(30,081) $(11,157) Cash Receipts provided by (used in) Financing Activities Receipts from General Revenue Fund Loan $70,000 $60,000 Repayments of General Revenue Fund Loan (39,000) (52,000) Total Financing $31,000 $8,000 Net Increase (Decrease) in Due from General Revenue Fund $919 $(3,157) Due from General Revenue Fund, beginning of year 49 3,206 Due from General Revenue Fund, end of year $968 $49 See accompanying notes to financial statements 12

16 Saskatchewan Notes to the Financial Statements March 31, Authority The Saskatchewan (the Fund) operates under the authority of The Student Assistance and Act, The primary purpose of the Fund is to support the Saskatchewan Student Loan Program. The Trustees of the Fund administer the Fund. 2. Description of the Program Under the terms of the Saskatchewan Student Loan Program, student loans are provided to qualifying individuals based on a determination of need. Loans are interest-free while the student is in full-time studies and for a maximum of six months between periods of study. They become repayable on the first day of the seventh month following discontinuance of studies or graduation; however, interest begins to accrue on the first day of the first month following discontinuance of studies or graduation. Program benefits, including maintenance of loans in interest-free status during periods of study, provision of grants, bursary and grant debt reduction benefits and debt management benefits, are tied to loan years, which commence August 1 and end July 31 of each year. Provincial student loans managed through the Fund consist of: loans financed by the Province issued prior to August 1, 1996; loans financed by Royal Bank during the period August 1, 1996 to July 31, 2001; and loans financed by the Province effective August 1, 2001, under the Canada-Saskatchewan Integration Agreement for the Administration of Federal and Provincial Student Loans. Benefits of the Saskatchewan Student Loan Program are available to borrowers under all three program regimes. For Canada-Saskatchewan integrated student loans issued under the Canada-Saskatchewan Integration Agreement for the Administration of Federal and Provincial Student Loans: the (the Ministry) provides loan authorization for both Saskatchewan and Canada loans; an external agency (service provider) manages loan disbursement, administration and repayment; and the Government of Canada is responsible for the collection of bankrupt and defaulted loans. 3. Significant Accounting Policies The financial statements are prepared in accordance with Canadian public sector accounting standards issued by the Public Sector Accounting Board. A statement of re-measurement gains and losses has been omitted as there were no relevant transactions to report. The following accounting policies are considered significant: a) Basis of Accounting These financial statements are prepared using the accrual basis of accounting. b) Student Loans Receivable Student Loans Receivable are recorded at cost less allowances. Cost includes the amount advanced, accrued interest and other charges, less repayments, bursaries and grants. Simple interest is charged on loans following the interestfree in school period. Payments on loans are first applied to interest, then to outstanding principal. For loans held by the Fund, allowances are deducted from loans receivable for the following: i) estimated uncollectible loans due to default on repayment, based on past collection experience; ii) the cost of holding student loans in interest-free status; and iii) estimated debt reduction and debt management benefits. 13

17 c) Revenue Government transfers are recognized in the financial statements in the period in which the events giving rise to the transfer occur, eligibility criteria are met, and reasonable estimates of the amount can be made. Interest on Student Loans and Interest Revenue from the General Revenue Fund are recorded when receivable. Recovery of Bad Debt is recorded when received. d) Expense Saskatchewan Student Grants, Saskatchewan Student Bursaries, Low- and Middle-Income Student Grants and Student Grants for Persons with Dependants Age 12 to 18 are recorded when the transfer is authorized and as eligibility criteria are met by students over their period of study. The Royal Bank Interest Differential, Repayment Assistance Plan, Nurses Loan Forgiveness, Permanent Disability/Death Benefit, and Bad Debt Expense are recorded based on estimates of expected utilization. Interest Grants to Students reflect the cost of holding student loans in interest-free status during periods of study. The cost is recorded at the time of loan disbursement and amortized to revenue over the estimated interest-free term (Loan Discount Amortization). Interest on General Revenue Fund Loan is recorded over the term of the loan. Collection Costs and Service Provider Costs are recorded in the period that the service was provided. Canada Student Grants and Provincial Student Grants Other are expensed when approved and eligibility criteria are met. e) Measurement Uncertainty The preparation of financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates. Measurement uncertainty impacts Student Loans Receivable (Note 4). f) Financial Instruments The Fund s significant financial instruments consist of Due from General Revenue Fund, Appropriation Due from General Revenue Fund, Accrued Interest, Other Receivables, Student Loans Receivable, General Revenue Fund Loan, General Revenue Fund Interest Payable, Due to Royal Bank of Canada and Other Accounts Payable. All financial instruments are measured at cost or amortized cost. g) New Accounting Standard Not Yet in Effect PS 3430 Restructuring Transactions, which is a new standard on how to account for and report restructuring transactions by transferors and recipients of assets and/or liabilities, has not been applied in preparing these financial statements. It will become effective April 1, The Fund plans to adopt the new standard on the effective date and is currently analyzing the impact this will have on these financial statements. 14

18 4. Student Loans Receivable (thousands of dollars) Gross Student Loans Receivable, beginning of year $169,021 $156,240 Add: New loans during the year 61,949 59,693 Legal fees 24 8 Interest earned on student loans 2,650 2,194 Deduct: Loan repayments (17,883) (16,826) Amounts authorized to reduce loans (31,455) (32,288) Loans written off (2,438) - Gross Student Loans Receivable, end of year $181,868 $169,021 Gross Student Loans Receivable $181,868 $169,021 Allowance for Repayment Assistance Plan (11,138) (8,960) Allowance for Nurses Loan Forgiveness (750) (589) Allowance for Permanent Disability/Death Benefit (657) (530) Interest Grants to Students (4,342) (2,413) Student Bursaries Payable (391) (20,430) Low-Income and Middle-Income Grants Payable (87) (1,559) Student Grants for Borrowers with Dependents Age (5) (424) Allowance for Uncollectible Loans (30,014) (28,363) Student Loans Receivable $134,484 $105,753 Student Loans Receivable consist of amounts owing by borrowers for loans granted prior to the Canada-Saskatchewan Integration Agreement ( $8 thousand; $9 thousand), and subsequent to the Integration Agreement ( $181,860 thousand; $169,012 thousand), offset by debt reduction benefits payable, debt management benefits payable and the allowance for uncollectible loans. Included in the amounts authorized to reduce loans are Student Bursaries, Low- and Middle-Income Student Grants and Student Grants for Persons with Dependants Age Variability in Student Loans Receivable Estimation is a factor in the following offsets to Gross Student Loans Receivable: Allowance for Repayment Assistance Plan is an estimate of future costs based on projected prime rates of interest, projected months of repayment assistance utilization and estimates for program uptake. Allowance for Nurses Loan Forgiveness is an estimate of future costs based on projected average debt levels and estimates of program uptake. Allowance for Permanent Disability/Death Benefit is an estimate of future costs based on estimates of program utilization in relation to projections of future average value of loans in study, loans in repayment and defaulted loans. Interest Grants to Students is calculated assuming that students remain in school for an average of three years, and applying the Fund s borrowing rate. Allowance for Uncollectible Accounts The Fund is exposed to losses in the event that borrowers default on repayment of their student loans. The Fund s maximum risk is represented by Gross Student Loans Receivable. Management estimates are used to determine the dollar value of loans expected to be uncollectible. Interest income continues to be earned on all loans to the point of write-off. The recorded Allowance for Uncollectible Loans includes provision for interest income earned on impaired loans. 15

19 The allowances could reasonably be expected to fluctuate in the next 12 months as follows: 2018 Actual (thousands of dollars) 2018 Range of Accruals Allowance for Repayment Assistance Plan $11,138 $7,570 to $15,580 $8,960 Allowance for Nurses Loan Forgiveness $750 $601 to $865 $589 Allowance for Permanent Disability/Death $657 $532 to $795 $530 Interest Grants to Students $4,342 n/a $2,413 Allowance for Uncollectible Loans $30,014 $28,013 to $32,063 $28, Financial Instruments and Risk Management Through its financial assets and liabilities, the Fund is exposed to various risks. Credit Risk Credit risk is the risk that one party to a financial instrument will fail to discharge their responsibilities with respect to the financial instrument, and in so doing, cause a loss for the other party. For the Fund, credit risk is significant with respect to potential non-repayment of student loans. Mitigation processes aimed at minimizing credit losses begin with procedures that support the granting of loans and are ongoing throughout the loan life cycle such as conducting credit checks, providing repayment support to low-income borrowers, and undertaking well defined procedures for addressing loan delinquencies. Loans are interest-free during periods of study and become repayable on the first day of the seventh month after graduation or discontinuation of study. The Fund s maximum risk is represented by Gross Student Loans Receivable detailed in Note 4. The following table sets out details of Gross Student Loans Receivable and Allowance for Uncollectible Loans: (thousands of dollars) 2017 Actual Loans in Study (no payments due) $99,732 $91,833 Loans in Repayment: Current or Receiving Debt Management Benefits 61,671 56,258 Up to 270 Days Past Due (Delinquent) 3,639 2,446 Over 270 Days Past Due (Default) 16,826 18,484 Loans in Repayment, Principal and Accrued Interest $82,136 $77,188 Total Gross Student Loans Receivable $181,868 $169,021 Allowance for Uncollectible Loans (30,014) (28,363) Debt reduction and debt management benefits payable (17,370) (34,905) Student Loans Receivable $134,484 $105,753 Interest Rate Risk Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Loans in Repayment and General Revenue Fund Loan are subject to interest rate risk related to repayment terms. For Loans in Repayment, the current portfolios have effective interest rates of 3.5% to 6.5% ( % to 6.5%). Interest rates are charged pursuant to The Student Assistance and Regulations, 2001 and The Saskatchewan Student Direct Loans Regulations. For the majority of loans held by the Fund, interest rates are set at the option of the student either at a floating rate or a fixed rate at the time of loan consolidation. The floating rate is equal to prime and the fixed rate equal to prime plus 2.5%. 16

20 Interest Rates for Loans in Repayment are as follows: Interest Rate (thousands of dollars) % - 2.9% - $74,808 3% - 3.9% $80,077-4% - 4.9% 2 5 5% - 5.9% % - 6.9% 8 9 Loans in Repayment, Principal $80,155 $74,869 The total interest revenue earned on loans in repayment is a small portion of the Fund s total revenue. Changes in interest rates and the resultant increase or decrease in Interest on Student Loans revenue are managed within the Fund s finances or, if necessary, through changes in the appropriation from the General Revenue Fund. Interest rates for the General Revenue Fund loan are adjusted quarterly and reflect the Province s eight year cost of borrowing. Resources to manage the cost of borrowing are provided to the Fund through an annual appropriation. Variations in interest rates are managed within the Fund s finances or, if necessary, through changes in the appropriation from the General Revenue Fund. Liquidity Risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting financial obligations as they fall due. Management undertakes regular cash flow analyses to ensure that there are sufficient cash resources to meet all obligations. Further, the Fund s liquidity risk is minimal as the Fund s bank accounts are supported by the Province of Saskatchewan. 6. Due from General Revenue Fund The Fund s bank accounts, with a balance of $968 thousand ( $49 thousand), are included in the Consolidated Offset Bank Concentration arrangement for the Government of Saskatchewan. Under the terms of the Consolidated Offset Bank Concentration arrangement, interest rates are based on the General Revenue Fund s 30-day borrowing rate and the Fund s average daily bank account balances. Interest is calculated and paid quarterly by the General Revenue Fund. The General Revenue Fund s 30-day borrowing rate for 2018 ranged from 0.5% to 1.3% ( % to 0.6%), which resulted in interest revenue of $50 thousand ( $54 thousand). 7. General Revenue Fund Loan Effective August 1, 2001, the Province assumed responsibility for the financing of student loans. Loans from the General Revenue Fund totalling $135.0 million ( $104.0 million) have been provided to the Fund to support this role. Under the terms of the loan agreement with the General Revenue Fund, interest rates are based on the General Revenue Fund s eight year cost of borrowing and principal loan payments are calculated as the sum of debt reduction benefits applied against student loans, the principal portion of student payments received by the Fund and accounts written off. The General Revenue Fund s average eight year cost of borrowing rate for 2018 was 2.5% ( %), which resulted in interest expenses of $2.8 million ( $2.1 million) and interest owing of $845 thousand ( $719 thousand). 8. Related Party Transactions These financial statements include transactions with related parties. The Fund is related to its Trustees, who are the key management personnel of the Fund, and all Government of Saskatchewan ministries, agencies, boards, school divisions, health authorities, regional colleges and crown corporations under the common control of the Government of Saskatchewan (collectively referred to as related parties ). The Fund has a number of related party transactions with the General Revenue Fund included in these financial statements. 17

21 Routine operating transactions with the General Revenue Fund settled at normal trade terms include$27.7 million of transfer revenue ( $35.0 million) and $2.5 million ( $1.7 million) of transfers receivable. Other related party transactions with the General Revenue Fund are disclosed separately in Note 6 Due from General Revenue Fund and Note 7 General Revenue Fund Loan. In accordance with established government practice, the Fund s administrative and occupancy costs were paid by the Ministry. Accordingly, no provision for these costs is reflected in these financial statements. 9. Accounting Changes On April 1, 2017, the Fund adopted the following new standards: i) PS 2200 Related Party Disclosures, a new standard defining related parties and establishing guidance on disclosure requirements for related party transactions; ii) PS 3210 Assets, a new standard providing guidance for applying the definition of assets and establishing disclosure requirements for assets; iii) PS 3320 Contingent Assets, a new standard defining and establishing guidance on disclosure requirements for contingent assets; iv) PS 3380 Contractual Rights, a new standard defining and establishing guidance on disclosure requirements for contractual rights; and, v) PS 3420 Inter-Entity Transactions, a new standard establishing guidance on accounting for and reporting on transactions between organizations in the government reporting entity. The adoption of the new standards has been on a prospective basis, without restatement of prior period comparative amounts. The accounting changes did not have a significant impact on the current year financial statements. 10. Budget The operating budget was approved by the Trustees of the Fund on May 8,

22 For More Information If you have any questions or comments we invite you to call or contact: th Avenue Regina, Saskatchewan S4P 0M3 The produces three annual reports: The Annual Report Annual Report Training Completion Fund Financial Statements To obtain more information about the programs and services contained in this Annual Report or to view other annual reports visit our website at saskatchewan.ca. 19